Saturday, November 19, 2011

What does 50 years feel like?

Upper-Sheringham-post-1912There’s not a lot to do on the train to Dusseldorf: I could try to catch up with email or read a book but the scenery and the swaying  make it better for listing to a podcast.  I happened onto Rethinking the Sixties from PRI, remembering figures like Hayden and Dylan who defined the decade for a generation in the US.

I was slightly young for it, I entered high school in 1968; I watched the riots at the Democratic convention on my grandmothers television while on holiday in Ohio.  The music, the war, the protests were things that the older kids did, things that we would do when we were in college.  Of course, in 1972 it was largely over: I got my draft lottery number (over 300) even as the war was ending.

Not really that long ago: it feels like yesterday.

Only it was fifty years ago.

I paused to get my thoughts around that fact.  Think about it: today, we are as far removed from the 60’s as people of that time were from 1912.  Tsunderlandengland1912 missionarieshat is an absolutely stunning idea: in 1912, the Titanic sailed from Southampton,  Woodrow Wilson became president,  Amundson became the first person to reach the South Pole.  The Beaumont Hotel opened in Maastricht in 1912.  In the intervening fifty years there would be two world wars, a Great Depression, a revolution in Physics, the arrival of business and transportation and communication technologies that were unimagined at the start of the century.

1962 was a completely different world from 1912.  So, is 2012 a completely different world from 1962?

It doesn’t feel like it.  Nothing feels unfamiliar, only more evolved.  I had access to a computer in high school (granted, there was only one computer for the whole school), color television had arrived, we shopped in food stores, cars weren’t Bal_populaire_du_14_juillet_1912_(Paris)too different, my father went to the office much as people do today.  Some things feel qualitatively different: internet access to goods, knowledge, and people, wide social equality among genders and ethnicities, a lot more ethic restaurants that truly reflect their origins. The Port Huron Statement that captured 60’s youth politics feels out of time now.  But there isn’t anything that feels different on the scale of change, on the magnitude of events, that filled 1912 to 1962.

My grandfather was just a boy in 1912, I wonder how he would compare the two periods.   Was there less change after the 60s, or do I just have less perception of it?   By assimilation, accommodation, figuring out what to adopt, and where things fit in life, everything from cell phones to mission statements emerged and then became everyday-ordinary to us.  A digital camera, a blog:  who can say what looks antique from my children’s perspective, or revolutionary from my father’s.

50 years.  Strange how I really don’t feel it: how recognizable old friends still are and how relevant the knowledge from high school still seems.

It seems like it should feel a lot more…different, doesn’t it?

Friday, November 18, 2011

Trolling through Medica

When hospitals who need to buy things and companies who wish to sell them meet, the result is Medica, a yearly trade show held at the Dusseldorf fairgrounds.  I’d never attended before, there’s no scientific program and physicians generally don’t attend, so it really wasn’t my audience.  This year, though, I was shopping for service providers and exit partners, design ideas and competitive pricing.

And everyone was asking if we could meet at Medica.

The show is absolutely vast: 17 gigantic buildings, each holding all of the companies serving a particular specialty.  Genomics, for example, were in Building 1; electromedical in 9-11; plastics in 5, physiotherapy in 4.  It can take an hour to survey one building, methodically walking each aisle and scanning every booth.  Fortunately, it runs for four days, 8 1/2 hours per day.


The exhibits range from fascinating to bizarre: in a venue that big, companies reach to get noticed.  Usually it’s a matter of putting souvenir pens and young greeters out front, cookies and coffee farther back into the booth where the salesmen lurk.  Other times it’s a matter of mounting models in the scanners or sweating on the treadmills.  The biggest crowds seemed to gather where samples of handcreams were being distributed.

Sometimes the promotions work, sometimes not. 


It was a good show, though – despite being refused entry to the US Chamber of Commerce pavilion (for lack of an appointment!?), I met a lot of people and did a lot of business in a very short time.

Thursday, November 17, 2011

Zusatz: Crossing the frontier

Even after six years living in the Netherlands, the little things can trip me up.

This week, the big medical device show, Medica, is running in Dusseldorf.  The easiest way to get there is by train: NS to Roermond, Veolia to Venlo, then the VRR to Dusseldorf.  Simple.


The problem is that the station is two miles from the German border.   And any train ride, even a two-mile one, requires a ticket.

The solution is a Zusatz.

A Zusatz is a train ticket that covers that two mile stub: I’d never heard of it but it’s required to ride the VRR out of the Netherlands.  They can only be obtained at the point where the VRR embarks, using a separate ticket machine.  And, since the trains only run once each hour, there’s no time to learn about that process during a five minute transfer.

So, cooling my heels in the Venlo station for an hour and five minutes, there was plenty of time to understand and document the process for those who may follow my tumbling footsteps:

1) Find the special Fahrkarten ticket machines.  (Men and women seem equally confused by the process: the difference is that women cluster and consult, men frown and jab at buttons in solitary frustration).

2)  Hit the Zusatz Tickets button, then the Ausgabe… option.  They are the same price, but the top Tickets option gives you a stamped ticket good for only 90 minutes, while the lower Ausgabe choice gives an unstamped ticket that is good anytime.


3) Add a ticket: since I want to return to the Netherlands, I need two for the round trip, and I can’t buy a Zusatz in Dusseldorf.  In fact, buy several, so that this won’t happen again tomorrow during a tight connection.

4)  Pay the extortionate fare.

5)  Wait one hour for the next train.  (Bring reading material – there is little to do at 8 am in the Venlo station.)

6) Stamp the Zusatz.  Don’t do it earlier – don’t do it in Maastricht:  the ticket is only good for 90- minutes once stamped.

7)  Have the Zusatz ready when the conductor comes by to ask for it.  They actually did.

8) Remember to stamp the remaining Zusatz before leaving Dusseldorf.  Otherwise you have to hunt for a machine in stations along the route down.


PS:  Don’t forget to punch-in and punch-out during transfers from NS to Veolia.  Although both trains accept OV-Kaart, they run different accounts and you have to be checked in with the carrier you ride.

And, yes, at least I did that bit right…

Wednesday, November 16, 2011

The logic of share pricing - 2

Shares and volumeI wrote yesterday about the tension between setting a high share price and setting a low one when going out for funds.  A further twist is that the decision drives the amount of funds that company raises.

Lets say the company is prepared to offer 30,000 shares of stock.  At a high share price, those shares bring in more money than they would at a lower price.  Obvious, but the converse, less evident, is also true: if the share value is low, it limits the funds that the company can raise.

In our case, the slope seemed to be about £50,000 per point of share price, or per £100,000 in overall company valuation.  So, if our milestones, asset growth, and risk reduction doubled the company’s value, doubling its share price, we were probably in a position to raise £500,000. 

That would fund a year’s operations, further suggesting that we would be back in the market in 9 months time.  The logic is cold that way: I’d rather have raised enough to reach first revenue, but we’re just not far enough along yet.

Even this doesn’t end the tweaks of getting to the right price.  Will the company’s story justify the change in price since the last fundraising?  Will enough current shareholders take up their preemptory rights to reassure new ones (we’d need six figures from our current angels)?   Will the holidays divert investors spending?

It can all be a bit daunting: it’s more complex and subtle than I would have thought.  But it also build confidence to get good counsel, to understand the process, and to reach a decision that works the way it should.

Students come to me asking if they are ready to enter business: another degree, an internship, maybe a consultancy, will give them the skills they need to succeed.

I think that they lack confidence more than they lack skill.

A learn has to be learned this as I go along, staying alongside good people with ears open and mind engaged. 

And the confidence comes simply from the trying and succeeding.

Tuesday, November 15, 2011

The logic of share pricing - 1

valuationHigh price = Good price. 

How hard can it be?

Actually, share price is a deceptively simple idea, based only on the value of the company and the number of shares held by investors.

So, if the company  is valued at £1 million, its equivalent share price is £1,000K/70,000 = £14.29.

Conversely, if it has 70,000 shares outstanding at a price of £15,  it’s value is £1,500K.

For a public company, value is set by the open market.  But for a private or startup firm, it’s set internally.

Take the same company, previously priced at £15 per share, but now a year on from that.  It’s met some milestones, acquired some assets (equipment, knowledge, patents), reduced it’s overall risk.

Its ready to raise more funds by selling additional shares to private investors.

Should it set a low or high share price?

A high price is the obvious answer: it raises the worth of existing shareholders and validates the progress that the company has made.

Further, if minimizes dilution. To raise £1 million, the company must issue 40,000 shares at a price of 25, diluting existing shareholders by 36%.  However at a price of 35, only 28,571 shares must be issued, diluting by far better 29%.


A low share price allows existing shareholders to buy a larger quantity of shares.  A £1 million fundraising requires a 1% shareholder to put £10,000 more in to maintain her percentage ownership.  A lower share price, 25 instead of 35, means 400 shares rather than 286 for the money, and a correspondingly bigger profit if the stock later rises in value.

So, there’s the dilemma: when the Board of Directors sets a price, do they go high or low?

It’s complicated, because Directors have a responsibility to both the company and to the investors, whose ideal price is widely different.  And when Directors are Shareholders, its a direct conflict of interest.

The tension is there in Board discussions; I hadn’t appreciated it until going through it.  But a good Board, my Board, discussed the pro’s and cons and never wavered from doing what was right for the company, not themselves.

‘just another one of those things Business School doesn’t teach you.

Sunday, November 13, 2011

Kind of, almost, missing meetings

OutlookBack in the day…

I’d pull into the parking lot at 8, grab a cup of coffee from the cafeteria, and head upstairs to the office.  A few people were generally in early, I‘d poke my head into or over their cubicle and see how life was going, what news there was to give shape to the day ahead.  Coffee empty, I’d drop into my office chair and bring up the calendar

…which would be colorful and crowded.  Another day packed tight with meetings.

And at 5:00, I’d be surrounded by unfinished writing and unread papers and undreamt thoughts.

Meeting from hellSo one of the small pleasures of self-employment and virtual offices has been the near-total lack of meetings.

I probably have three meetings a week: they all involve making room reservations and driving at least half an hour each way.  With that commitment, we plan ahead, prepare materials, and make the most of the time.

The rest of the time, I communicate with my far-flung team by Skype and e-mail.  More flexible, less intrusive, and I can work contact around reading, writing, thinking, rather than the other way around.

spirographI stay clear, coordinated, and transparent with everyone, almost every day.  As people add to the team, I add them to my circles.

and so the number of connections grows, exponentially.

No problem, I write a lot more e-mails, make a lot more calls,


I’m starting to wonder if the occasional meeting might save a whole lot of pointless writing and calling.